Yahoo Finance Fresh move to stop Woolworths, Coles edging out competition
The government is looking into zoning and planning reforms to make sure the two supermarkets aren't unfairly edging out competitors.
Woolworths and Coles could soon be forced to relinquish the rights to dozens of undeveloped supermarket sites. The two biggest supermarket chains have been accused of price gouging shoppers and engaging in dodgy pricing strategies, and the government has been looking at ways to prevent their market domination.
One avenue is reforming planning and zoning regulations that could allow other supermarkets to pop up in places where Coles and Woolies had been trying to establish a presence. Labor believes the move would “help to make pricing fair, boost competition" and make sure that there are "significant consequences" for supermarkets that do the wrong thing.
"We don’t want to see ordinary Australians, families and pensioners being taken for a ride by the supermarkets, and we’re taking steps to make sure they get a fair go at the checkout," Prime Minister Anthony Albanese said.
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"Current planning and zoning frameworks, including land use restrictions, zoning laws and planning regulations, are acting as a barrier to competition by inhibiting business entry and expansion.
"They potentially allow for land banking, preventing competition and pushing up prices in our local communities."
Land banking is when a supermarket purchases land without any intention of developing it or within an appropriate time frame to discourage competitors from also setting up shop in the same area.
The consumer watchdog recently found Woolworths had interests in 110 potential sites while Coles was looking at 42 other locations, which pale in comparison to Aldi's 13.
Treasurer Jim Chalmers will be speaking with his state and territory counterparts to look at ways to ensure everyone is on the same level playing field.
"This is all about ... more sites for potential competitors to the big supermarkets, we want to make sure that people are getting a fair go at the checkout," he said.
The Australian Competition and Consumer Commission (ACCC) found it had taken Aldi more than 20 years to reach a 9 per cent share of national supermarket retail sales.
The watchdog believes this illustrates the "level of difficulty entering and expanding in supermarket retailing" in the Australian landscape.
“Our preliminary view is that planning and zoning laws may slow a supermarket retailer’s ability to develop new stores by creating additional costs or adding significant delays,” ACCC deputy chair Mick Keogh said.
“We have received submissions raising concerns about alleged ‘land banking’ but have not yet formed any views on this issue.”
The ACCC is set to deliver its final report for its supermarket inquiry in February.
Allegations of land banking aired during Senate inquiry
Woolworths and Coles were hauled before a Senate inquiry earlier this year to answer a range of questions.
Two of the topics up for discussion were allegations of land banking and creeping acquisitions to edge out competitors.
Metcash raised concerns at the inquiry that the major supermarkets were "continuing strategies involving the acquisition of independent stores, with a resulting increase in their market powers without constraint, to the long-term detriment of consumers" through gradual and small acquisitions.
The wholesale distribution company also noted that Coles and Woolworths held less than 40 per cent of the market in the 1980s, but now it has close to 70 per cent, and more than 90 per cent in some regions. This fact was recently called out by the ACCC, which said the supermarket "oligopoly" can "limit incentives to compete vigorously on price".
Ex-Woolworths CEO Brad Banducci explained that his supermarket chain didn't engage in "traditional" land banking and explained the delays in building a new supermarket were a product of numerous factors including planning approvals and construction issues.
Coles boss Leah Weckert added that the supermarket sometimes would be forced to wait until an area reached a certain population or had the necessary infrastructure before construction would begin.
The Senate inquiry declared that despite Coles and Woolworths claiming they hadn't engaged in land banking, "in fact, the descriptions given above could arguably describe land banking".
Fresh funding to crack down on alleged dodgy behaviour
The ACCC was recently awarded a fresh batch of funding to continue its work investigating Coles and Woolworths' behaviour.
The ACCC has secured $30.5 million over the next three years, which Chair Gina Cass-Gottlieb said would allow for a significant enhancement of their enforcement and compliance activities.
“This funding will enable us to escalate a range of investigations in this sector, including in relation to potential misleading pricing claims or practices, claims about delivery timeframes and costs including for regional and remote Australians, and businesses misrepresenting consumers’ rights under the Australian Consumer Law,” she said.
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